S&P 500 Earnings Season Update: August 3, 2018

To date, 81% of the companies in the S&P 500 have reported actual results for Q2 2018. In terms of earnings, more companies are reporting actual EPS above estimates (80%) compared to the five-year average. If 80% is the final number, it will mark the highest percentage of S&P 500 companies reporting a positive EPS surprise for a quarter since FactSet began tracking this metric in Q3 2008. In aggregate, companies are reporting earnings that are 4.9% above the estimates, which is also above the five-year average. In terms of sales, more companies (74%) are reporting actual sales above estimates compared to the five-year average. In aggregate, companies are reporting sales that are 1.4% above estimates, which is also above the five-year average.

The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report), year-over-year earnings growth rate for the second quarter is 24.0% today, which is above the earnings growth rate of 22.8% last week. Positive EPS surprises reported by companies in multiple sectors (led by Information Technology and Health Care) were significant contributors to the increase in the earnings growth rate over the past week. All 11 sectors are reporting year-over-year earnings growth. Ten sectors are reporting double-digit earnings growth, led by the Energy, Materials, and Information Technology sectors.

Sector-Level Breakdown

The blended, year-over-year sales growth rate for the second quarter is 9.8% today, which is above the revenue growth rate of 9.3% last week. Positive sales surprises reported by companies in multiple sectors were significant contributors to the increase in the revenue growth rate over the past week. All 11 sectors are reporting year-over-year growth in revenues. Four sectors are reporting double-digit growth in revenues: Energy, Materials, Information Technology, and Real Estate.

Looking at future quarters, analysts currently project earnings growth to continue at about 20% through the remainder 2018. However, they predict lower growth in the first half of 2019.

The forward 12-month P/E ratio is 16.5, which is above the five-year average and above the 10-year average.

During the upcoming week, 47 S&P 500 companies (including one Dow 30 component) are scheduled to report results for the second quarter.

Senior Earnings Analyst

John’s weekly research report, Earnings Insight provides analysis and commentary on trends in corporate earnings data for the S&P 500, including revisions to estimates, year-over-year growth, performance relative to expectations, and valuations. He is a widely used source for the media and has appeared on CNBC, Fox Business News, and the Business News Network. In addition, he has been cited by numerous print and online publications such as The Wall Street Journal, Financial Times, The New York Times, MarketWatch, and Yahoo! Finance.